Buying Logic: Ghost of Christmas Future

DURING A LONG "SAVE THE AIRLINE" MEETING, someone declared that airlines are basically cash accumulators for other constituencies. It's truethere are plenty of government entities that tax them, groups sell them equipment and banks lend them moneybut I've always believed they are so much more. Airlines drive the global economy and connect us in ways that no other business or technology can.

DURING A LONG "SAVE THE AIRLINE" MEETING, someone declared that airlines are basically cash accumulators for other constituencies. It's truethere are plenty of government entities that tax them, groups sell them equipment and banks lend them moneybut I've always believed they are so much more. Airlines drive the global economy and connect us in ways that no other business or technology can.

Yet all too often they tend to address economic impacts with the same old playbook. Now, perhaps more than ever, airlines, their suppliers, contractors and constituents must become proficient at striving for simplicity, shattering assumptions, breaking rules and exploiting technology. The new global economy will require this from each business. Innovation, cross-business collaboration and the ability to react at the speed of the global marketplace are the prerequisite competencies for the future. This will take a major rethinking of all business models as well as a larger understanding of their relationships and interactions.

Innovation that can create sustainable value will be paramount. Imagine a future where there are only four major airlines in operation throughout the world. Globalization has rewritten longstanding regulations and foreign ownership laws. Airlines are still operating under the same playbook, except they've adjusted capacity, increased fares to manage erratic fuel costs and reduced service to smaller markets. Under this scenario, suppliers and contractors can still expect the same traditional economic cycles. There is no great change in the way everyone does business from today.

A new airline model enters the market on top of the current model. This one is simple: It breaks every rule about traditional airline models and has found a unique way to exploit technology. It uses the power of next-generation Web technology coupled with privately owned aircraft and is completely operated by the supply and demand generated between potential customers and private aircraft owners. Initially, this new airline model fulfills an unmet need in the underserved markets.

The new airline owns only the technology. There is no schedule or pre-planned network with fixed hubs. There are two users. The first are aircraft owners who enter the aircraft's availability and location into the system. Potential customers enter their flight requirements and the system matches the two. It then determines the price for the flight. Agreements are made or abandoned.

Let's take it one step further. Imagine this new business model is not run by two or three startup airline companies but rather by hundreds of private airplane owners who only need the next-generation Web technology and their own assets. Every owner of a private aircraft is now an "airline," though not in the traditional sense of the word. A new definition creates hundreds of entrepreneurs providing service to practically anywhere in the world.

What implications would this new model have for your business today? Think of the enormous change and opportunities for new value creation within your own businesses. Each business will have to ask, what new products and services can be developed by this innovation? Based on the changes around me, can I adapt a core competency to a new market? Can I find new partners to collaborate with around the globe, creating further value?

Every once in awhile the world undergoes a dramatic change. We are in one of those periods. So as the New Year approaches and we think of the uncertainty ahead, we also should think about the many opportunities. Airlines, suppliers, contractors and constituents have become inexorably linked. We are dependent upon each other for survival and share common problems. We all need to reduce costs, develop new products and services, provide customer service, care for our people and continue to improve shareholder value. Working together across business lines will feed innovation and create long-term viability for all.

By Lucio Petroccione Jr., a former executive at Delta Air Lines, is the founder and CEO of the Petroccione Group, an aviation consulting firm.

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